02/25/2013 12:02 EST | Updated 04/27/2013 05:12 EDT

Reports for years showed Montrealers were getting hosed on construction: probe

MONTREAL - Quebec's corruption inquiry has heard that there was evidence years ago that Montrealers were overpaying for construction projects — with sewers and pipes costing 85 per cent more than elsewhere in the province.

That information was contained in one of several reports commissioned over the years by the municipal government, which allegedly failed to act on them.

The inquiry began Monday to question some of the senior city officials who signed off on those inflated contracts.

The first of those — an engineer who served as public-works director — told the inquiry that he was stunned to learn that contracts were being rigged by his own employees.

Robert Marcil said he "fell off his chair" when he heard one of his former employees, Gilles Surprenant, testify about how he rigged contracts. Marcil said he had no idea that Surprenant or others were accepting bribes and defrauding the system.

Marcil himself has been accused of benefiting from the generosity of contractors, such as the free trip to Italy paid by one of them which led to his departure from city hall.

But he defended himself as a man who tried to clean up the city. He testified that he tried fighting back against costs that seemed high, and had brought in an outside firm to verify certain contracts.

Marcil told the inquiry that the firm looked at 30 projects — and 26 were within budget, with the other four falling within 10 per cent of the target. He said he'd never heard of project costs coming in at 30 per cent or more, as described at the inquiry.

That runs counter to the testimony of an investigator-analyst with the inquiry, who looked in detail at four reports commissioned for various city administrations over a 13-year period.

Some were done in-house and others were done by external firms, but all said essentially the same thing: construction work cost more in Montreal.

They also repeated many similar concerns — such as the idea that there was a concentrated construction market with a serious lack of competition.

"There were signs that were there, and there were ways of putting preventive measures in place — means that worked elsewhere in Quebec," Guy Desrosiers told the inquiry.

"From 1997 to February 2010, the problems that were identified continued to persist despite numerous, repeated recommendations on the same issues."

Desrosiers said the reports show that there were warning signs for over a decade that Montreal was significantly over-paying for projects. But after analyzing the internal city reports, he said it appeared officials did little to change things.

Four studies conducted over those years triggered alarm bells — not only about the concentration of companies winning contracts, but also about cost overruns.

There were other issues such as incomplete plans and accompanying documents; work sites lacking supervision; and poorly calculated cost estimates for projects.

But one of the major elements Desrosiers keyed in on was the lack of competition. A 2006 report noted that the City of Montreal received generally five or six bids for certain jobs, while a significantly smaller city — Quebec — would typically have a dozen.

Another report in 2009 revealed that sewer and water pipe projects cost 85.5 per cent more in Montreal compared to the rest of the province. It was explained in part by factors unique to Montreal, such as certain technical issues.

But Desrosiers said the report did show the market was closed and there was a lack of competition.

Problems in the management and awarding of public contracts in Montreal were even highlighted in a 1997 report by the city auditor.

The city's former public works director said Monday that he didn't read all the projects that came across his desk.

Marcil said he was aware that his engineers talked with company bosses. So did he, having lunched two or three times a year with just about every construction boss named during questioning Monday.

He said he never accepted money, however.

As for the wine and golf tournaments lavished on bureaucrats, Marcil shrugged it off as a practice that was tolerated and had been for at least five decades.

He called it maintaining "good business relations," and said he often went for meals and accepted gifts.

Marcil said the practice extended to provincial contracts too, and went even higher up the food chain than himself.

He said his bosses accepted the same gifts.

"It wasn't in Montreal that I got my first bottle of wine or my first Christmas dinner," said Marcil, who worked in other municipalities before coming to Montreal.

"It wasn't a practice that was new in Quebec — it's something that's been around for at least 50 years."

He said he knew that employees under his watch were getting gifts.

"One may wonder if in 2013 it is ethical," Marcil admitted. "But it is a common business practice."

Marcil's testimony continues Tuesday.